China Mobile iPhone deal helps lift Apple

SAN FRANCISCO (MarketWatch) — Anticipation that China Mobile, the world’s largest telecom company in terms of mobile subscribers, will soon get the iPhone helped rally Apple Inc. stock to its highest point in a year on Thursday.

Apple
AAPL, -1.54%
ended the day with a gain of $2.90 a share, to close at $567.90 following a report in The Wall Street Journal late Wednesday that the company has reached a deal for China Mobile
CHL, -0.06%
to begin carrying the iPhone. Reports said an official announcement would be made on Dec. 18. The move would make Apple’s latest iPhone models available to a network that has more than 700 million mobile-phone subscribers.

Apple is notoriously tight-lipped about business information until it is ready to make an announcement. And China Mobile tried to temper enthusiasm for the a deal with Apple, as a spokeswoman told Agence France-Presse that “Talks between China Mobile and Apple on cooperation are still going on and we currently do not have anything to announce.”

Gene Munster, of Piper Jaffray, said it’s unclear when China Mobile would start selling the iPhone, and it is likely Apple hasn’t factored any revenue from sales to China Mobile in current forecasts for the quarter that ends in December.

Apple’s iPhone deal with China Mobile

(1:52)

Apple and China Mobile sign a deal to distribute iPhones on the world’s largest mobile carrier. Photo: AP

However, Munster estimated that the iPhone on China Mobile “will start selling in earnest” in the first quarter of 2014, and he believes China Mobile will account for sales of 17 million iPhones in 2014, which should add 5% to Wall Street’s consensus revenue forecasts for next year.

Munster added that “if Apple updates the iPhone in the fall, China Mobile would likely get both the new device in addition to the typical pricing changes to existing devices, which could put the iPhone 5c at a more attractive mid-end price.” The iPhone 5c currently starts at $99, while the base model of the iPhone 5s costs $199.

Earlier this week, UBS analyst Steven Milunovich raised his rating on Apple to buy from neutral, and lifted his price target on the company’s stock to $650 a share “in anticipation of China Mobile” getting the iPhone. Milunovich said the Chinese government should soon issue licenses for 4G networks, leading to China Mobile adding support for the iPhone in mid-to-late December.

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